Paying Voluntary Class 3 NI Contributions

RG2015

I am retired and reach state pension age in 2021/22 and can fill my NIC for two past years and the two years I have remaining. This will add £1,004.95 to my state pension forecast at a cost of £3,078.40.

My payment schedule is as follows.
2017/18 £741.00 which I will pay by 5/4/20 to avoid the cost increase
2018/19 £761.80 which I will pay by 5/4/21 to avoid the cost increase
2019/20 £780.00 payable from 6/4/19
2020/21 £795.60 payable from 6/4/20

I will need to pay my NIC for 19/20 and 20/21 by my state pension date to receive my maximum pension for the first payment.

My question is if I delay these second two payments will my pension increase for 19/20 and 20/21 be backdated to the drawdown date?

Eldi_Dos

If you have been providing any childcare during this time check Specified Adult Childcare Allowance before parting with any momey.

Audaxer

I would have thought you would have to have made all the payments before you start receiving your State Pension. I'm due to get my State Pension a few years later than that and I'm making Voluntary Contributions, and I'm assuming that to get up to my maximum I'll have to make all the contributions before I start taking it.

Dazed_and_C0nfused

Have you considering starting a small business and paying voluntary Class 2 National Insurance instead, at least for the later two years if not the first two?

Would save you c£1200.

Linton

Audaxer said:

I would have thought you would have to have made all the payments before you start receiving your State Pension. I'm due to get my State Pension a few years later than that and I'm making Voluntary Contributions, and I'm assuming that to get up to my maximum I'll have to make all the contributions before I start taking it.

No - you can pay Class 3 for previous years even after SPA.  See https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions.

RG2015

Dazed_and_C0nfused said:

Have you considering starting a small business and paying voluntary Class 2 National Insurance instead, at least for the later two years if not the first two?

Would save you c£1200.

Thank you. I had read this on another thread and whilst I know that there is nothing wrong with exploiting legal loopholes it makes me feel a bit uncomfortable.

At least I have a bit of time to research this for some of the years to find a way to ease my conscience.

Dazed_and_C0nfused

RG2015 said:

Dazed_and_C0nfused said:

Have you considering starting a small business and paying voluntary Class 2 National Insurance instead, at least for the later two years if not the first two?

Would save you c£1200.

Thank you. I had read this on another thread and whilst I know that there is nothing wrong with exploiting legal loopholes it makes me feel a bit uncomfortable.

At least I have a bit of time to research this for some of the years to find a way to ease my conscience.

Not sure I would call it s loophole as such.  If you look at the Self Assessment return you can see it is set up to cater for people who are self employed and have low turnover but want to pay voluntary Class 2 National Insurance.

I think there is even an option to say your turnover is £1k or less and you want to claim the Trading Allowance so you don't even have to complete the self employment page in full (but can still pay voluntary Class 2 National Insurance).

drumtochty

Do not be silly and get your knickers in a twist over Voluntary Class 2 NI contributions.

They are there especially for low earners to secure a state pension, not maybe or a loophole and were reinstated a year ago or so after an outcry by those people who do small jobs that assist to keep thing working in the country that would not suit those who need a full time income.

You need to have registered as self employed with HMRC by October 2019 to pay Class 2 NI in the 2019 2020 tax year. You are now to late to do that.

Just do it just after 6th April 2020.

It can be dog walking, ironing or ebay trading.

Add the self employed page to your 2020 2021 tax return this year.

Put in your less than £1,000 trading earnings most people only do about £100 work in the time.

Click the button that says you want to pay voluntary NI.

For the past two years the Self Assessment section has not worked on this page. You have to phone up HMRC after you have submitted the return and get them to click the button from within the HMRC IT system.

A few days later the tax demand is in your personal tax account, just pay it circa £153 but will probably be a touch higher this year.

If you feel bad about it put £100 into your local charity to clear that silly notion that you are wrong to do it.

Audaxer

Linton said:

Audaxer said:

I would have thought you would have to have made all the payments before you start receiving your State Pension. I'm due to get my State Pension a few years later than that and I'm making Voluntary Contributions, and I'm assuming that to get up to my maximum I'll have to make all the contributions before I start taking it.

No - you can pay Class 3 for previous years even after SPA.  See https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions.

I'm surprised by that. Does it mean you can make Voluntary Contributions even after you have started receiving the State Pension, or does it mean only if you have reached State Pension age but not started claiming it yet?

Dazed_and_C0nfused

Class 2 voluntary payments aren't due until 31 January after the end of the tax year they relate so there are some people who reach State Pension age in the first few months of the year who wont pay the last year's NIC until after their pension starts being paid.

Linton

Audaxer said:

Linton said:

Audaxer said:

I would have thought you would have to have made all the payments before you start receiving your State Pension. I'm due to get my State Pension a few years later than that and I'm making Voluntary Contributions, and I'm assuming that to get up to my maximum I'll have to make all the contributions before I start taking it.

No - you can pay Class 3 for previous years even after SPA.  See https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions.

I'm surprised by that. Does it mean you can make Voluntary Contributions even after you have started receiving the State Pension, or does it mean only if you have reached State Pension age but not started claiming it yet?

As far as I can see this is not stated anywhere.  However if it was an option only available to the relatively few people who defer their SP one would think that would be explicitly stated.  Anyone worried about it should contact the Future Pensions Centre.